February 17, 2018

Marian Tupy explains why all the Malthusian worry about overpopulation in the Third World was wrong:

Many people believe that global population growth leads to greater poverty and more famines, but evidence suggests otherwise. Between 1960 and 2016, the world’s population increased by 145 percent. Over the same time period, real average annual per capita income in the world rose by 183 percent.

Instead of a rise in poverty rates, the world saw the greatest poverty reduction in human history. In 1981, the World Bank estimated, 42.2 percent of humanity lived on less than $1.90 per person per day (adjusted for purchasing power). In 2013, that figure stood at 10.7 percent. That’s a reduction of 75 percent. According to the Bank’s more recent estimates, absolute poverty fell to less than 10 percent in 2015.

Rising incomes helped lower the infant mortality rate from 64.8 per 1,000 live births in 1990 to 30.5 in 2016. That’s a 53 percent reduction. Over the same time period, the mortality rate for children under five years of age declined from 93.4 per 1,000 to 40.8. That’s a reduction of 56 percent. The number of maternal deaths declined from 532,000 in 1990 to 303,000 in 2015 — a 43 percent decrease.

Famine has all but disappeared outside of war zones. In 1961, food supply in 54 out of 183 countries was less than 2,000 calories per person per day. That was true of only two countries in 2013. In 1960, average life expectancy in the world was 52.6 years. In 2015, it was 71.9 years — a 37 percent increase.

In 1960, American workers worked, on average, 1,930 hours per year. In 2017, they worked 1,758 hours per year — a reduction of 9 percent. The data for the world are patchy. That said, a personal calculation based on the available data for 31 rich and middle-income countries suggests a 14 percent decline in hours worked per worker per year.

December 19, 2017

Wealthy people – by which I mean people healthy, well-fed, well-clothed, well-shod, well-housed, and well-leisured and literate – are often deformed by the lovelier angels within their breasts into saviors. Busybodies. Officious do-gooders. Arrogant meddlers. Tyrants seeking as personal payoff not crass material gain but the perverted satisfaction of lording it over other people for what these tyrants sincerely believe to be the good of these other people.

Saviors need victims to save. And if such victims are not real and readily available, the saviors conjure them up by convincing themselves that this or that group of people are helpless victims eager to be raised from the muck of their misfortunes by the saviors. Sometimes the saviors convince even the groups they seek to save that they – the members of these groups – are indeed mired in a muck from which they can be extracted only by the saviors.

As society grows wealthier, the need to be saved by others from earthly misfortunes grows steadily less frequent and less dire while the itch to save others from earthly misfortunes grows steadily more frequent and more intense. A great irony is that, insofar as this itch to save grows faster than the need to be saved declines, the need to be saved might actually rise because the actions of those who itch to save more often than not worsen, rather than improve, the well-being of those who are the targets of the saviors’ efforts.

December 17, 2017

… consider the emergence of a Nature-worshipping environmentalism that would have been viewed as a crazy luxury in the hardscrabble times of 1800 or even of 1933. The economist and student of theology Robert Nelson calls environmentalism the new religion of the West (a West that nonetheless, outside of places like Poland or the United States, imagines itself to be irreligious) […] The economist and think-tank maven Fred L. Smith, Jr. speaks of “eco-paganism”: “Most environmentalists do not, of course, see themselves as pagans,” he writes. “Yet many do espouse a watered-down form of pantheism which elevates nature to near the status of a deity.” By now the good people of rich and secular places such as Sweden, though contemptuous of the childish absurdity (as most Swedes believe it to be) of their ancestors’ worship of a Lutheran God, have found their transcendent in the worship of Nature, and spend their Sunday mornings devoutly gathering mushrooms and lingonberries in Nature’s forest.

December 12, 2017

Thankfully, one of the biggest scams in the American tax code is finally under attack in the House version of Republican tax reform.

It’s the mortgage-interest deduction, which lets homeowners deduct interest paid on mortgages of up to $1 million for two houses. Ever since owning a home has been a central tenet of the American Dream since the end of World War II and the rise of suburbia, it’s been a given that deducting mortgage interest from your taxes is as American as apple pie.
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The House plan would limit filers to deducting interest on the first $500,000 of a mortgage on just one house, sending a blind panic through wealthy home owners, realtors, and the building trades, all of whom are terrified that a government subsidy is being yanked away from them.

But the real problem with the House bill is that it doesn’t go far enough. We should scrap the mortgage-interest deduction altogether and let housing prices reflect real market values.

The mortgage-interest deduction is typically justified by claiming that it lets people—especially vaguely defined “middle-class” people–afford homes. But it also increases the price of housing by making it artificially cheap to borrow, meaning homebuyers are willing to pay more. England, Canada, and Australia don’t let their taxpayers deduct their mortgage interest and they all have higher rates of homeownership than the United States.

The mortgage-interest deduction disproportionately benefits the wealthiest Americans, who soak up almost all the $70 billion a year it costs in foregone revenue each year. Reason Foundation’s director of economic research, Anthony Randazzo calculates that only 20 percent of tax filers claim the mortgage-interest deduction. That group by and large are part of six-figure households in a country where the median household income is $57,000.

Killing the mortgage-interest deduction might cause a one-time 7 percent drop in real estate prices, according to one estimate, with wealthy homeowners feeling most of the pain.

As a homeowner, that seems like a small price to pay to end a policy that distorts the real estate market, complicates the tax code, and benefits mostly wealthier Americans on the false promise that it makes home-owning affordable for the middle class.

The mortgage-interest deduction is just special interest pandering wrapped in a gooey story that equates “the American Dream” with having a mortgage. The tax code should be designed to raise the revenue necessary to pay for essential services, not to nudge and prod us into spending money on something the government decides is good for us.

November 23, 2017

As discussed fairly recently, the government requires you to pay taxes up to a certain point, but there’s nothing stopping you from payingmore than they ask. For Canadian federal taxes, Her Majesty in right of Canada would be delighted to accept any additional money you wish to donate. I’m sure your provincial or territorial government has a similar mechanism set up. Equivalent schemes are definitely available in the UK and probably other Commonwealth countries.

There’s an amusing ritual that takes place in Washington every time there’s a big debate about tax policy. A bunch of rich leftists will sign a letter or hold a press conference to announce that they should be paying higher taxes rather than lower taxes.

I’ve debated some of these people in the past, pointing out that they are “neurotic” and “guilt-ridden.”

But they apparently didn’t take my criticisms seriously and go into therapy, They’re now back and the Washington Post provides very favorable coverage to their latest exercise in masochism.

More than 400 American millionaires and billionaires are sending a letter to Congress this week urging Republican lawmakers not to cut their taxes. The wealthy Americans — including doctors, lawyers, entrepreneurs and chief executive — say the GOP is making a mistake by reducing taxes on the richest families… Instead of petitioning tax cuts for the wealthy, the letter tells Congress to raises taxes on rich people like them. …The letter was put together by Responsible Wealth, a group that advocates progressive causes. Signers include Ben & Jerry’s Ice Cream founders Ben Cohen and Jerry Greenfield, fashion designer Eileen Fisher, billionaire hedge fund manager George Soros… Most of the signers of the letter come from California, New York and Massachusetts.

Earlier in the month, I would have told these “limousine liberals” not to worry because I was pessimistic about the chances of a tax bill getting enacted. But then the Senate GOP unveiled a better-than-expected plan and I’m now semi-hopeful that something will make its way through the process.

That doesn’t mean, however, that these rich leftists should be despondent.

Because I’m a nice guy, today’s column is going to let them know that they don’t have to accept a tax cut. The Treasury Department has a website that they can use to voluntarily send extra money to Washington. It’s called “gifts to reduce the public debt,” and people like George Soros can have their accountants and lawyers calculate the value of any tax cut and then use this form to send that amount of money to D.C.

For centuries purple dye was worth more than gold. The dye used to produce purple fabric came from a sea snail that only lived off the shores of modern day Lebanon. Because it was so rare, purple became associated with royalty. This is the reason you don’t see purple on country flags. It was just too expensive to produce.

Populism revives the ancient ideology of zero sum for an age of majority rule. Liberalism, by contrast, is a recent ideology of positive sum, with rights for minority groups, which often generate the positive sum. The pioneering management theorist of the 1920s, Mary Parker Follett, called it “win-win.” Populism speaks instead of “win-lose,” and darkly suspects that the minority groups are the source of the “lose.”

Populism can be given what the philosophers call an “ostensive” definition, that is, pointing to instances one after another until the point is clear. All right, to speak only of those who achieved substantial if often temporary political power, the Gracchi, Savonarola, William Jennings Bryan, Mussolini, Juan Peron, Huey Long, Joseph McCarthy, George Wallace, Hugo Chávez, Silvio Berlusconi, the Tea Party, Jeremy Corbyn, Marine Le Pen, Bernie Sanders, Donald Trump. Zero sum prevails. Italy in the 1930s can be rich and, especially, glorious only by foreign conquest, incompetently pursued. Southern whites in the 1880s can only be dignified if blacks are not. America in the late 2010s can only be made richer if China and Mexico are made poorer.

What has been odd and definitive of populism during the past couple of centuries, though, is not the zero sum, an old and commonplace assumption about the economy, but majority rule as the default in politics. “Democracy,” after all, has only recently become a good word. Majority rule was until the nineteenth century regularly described as mob rule. Odi profanum vulgus. It was to be disdained, and only a tiny group of radical priests and levellers disagreed. “When Adam delved, and Eve span/ Who then was the gentleman?” John Ball asked in 1380, for which he was drawn and quartered. In 1685 the Leveller Richard Rumbold, facing the hangman, declared, “I am sure there was no man born marked of God above another; for none comes into the world with a saddle on his back, neither any booted and spurred to ride him.” Few in the crowd gathered to mock him would have agreed. A century later, many would have. By 1985 virtually everyone did, at least in declaration.

Populism, then, is democracy in the polity when obsessed with zero sum in the economy. Socialism is a populism with a grand theory attached. Neither is strange. After all, zero-sum thinking is deeply natural. It is the default, certainly, for humans and for other great apes. Herd animals and social animals behave “charitably” towards their herd or society, it may be, though all animals will fight for territory, or else avoid the fight from a sense of justice. A dog will not steal another’s bone.

Modern populism was expressed by the Louisiana governor Huey Long in 1934 as “Every man a king.” A classical liberal can warmly agree, as against the affection for hierarchy among conservatives. In the eighteenth century kings had rights, and women had none. Now, thankfully, it’s the other way around.

But Huey’s way of achieving the rights was that of both Bad King John and his enemy Robin Hood, characteristic of the feudal and now the socialist and populist order, of violence. “It is necessary to scale down the big fortunes,” he said, “that we may scatter the wealth to be shared by all of the people.” Scale down by governmental violence one person’s earnings by trade and betterment, in order to give to another person, and all will be well. Zero sum. Win-lose.

October 21, 2017

In the Guardian, Sally Weale, Richard Adams and Helena Bengtsson disclose the shocking news that Oxford and Cambridge select very few students from outside the two wealthiest tiers of society or from outside London and the southeast:

Oxford and Cambridge universities have gone backwards on the socio-economic diversity of their student bodies, with more than four in five students coming from the most privileged groups, a Guardian analysis has found.

Data released to the MP for Tottenham, David Lammy, under the Freedom of Information Act shows that 82% of offers from Oxford and 81% from Cambridge went to students from the top two socio-economic groups in 2015, up from 79% at both universities five years earlier.

Lammy, who has campaigned for greater ethnic and socio-economic diversity at Oxbridge, said he was appalled that the universities were moving backwards on socio-economic background measurements. “This data clearly shows that a privileged background is still the key to getting through the Oxbridge admissions process,” he said.

The data shows huge regional disparities in offers, with some parts of England and Wales failing to secure a single place for years while students in London and the south-east received almost half of all offers.

Despite the two universities’ extensive efforts to increase the diversity of their intake, new research shows there are still swaths of the country with low rates of application and disproportionately fewer offers.

Students from benighted, uncivilized places like Middlesbrough are rarely able to gain admission:

Middlesbrough, where 101 students applied to Oxbridge, secured just 11 places in five years.

Carolyn Yule, the director of A-levels at Middlesbrough College, said that not one of her Oxbridge applicants had been successful in her three years in the job. “One of the students we did a lot of work with, he wanted to read mathematics and he was absolutely fantastic,” she said. “He got an interview and could not have done any more, but he didn’t get in. We didn’t really get a lot of feedback from them. We don’t even feel we know why our students don’t get in.”

There are 38 colleges at Oxford, 31 at Cambridge (close enough anyway). Given that not everyone with that sort of level of academic achievement actually tries to enter Oxbridge then what do we think should be the offer rate to these Black Britons? It’s most certainly not 4 offers per college per year, is it? Or 6, or whatever 400 divided by 70 is.

Given the small numbers the stats are going to be weird anyway, but what is the number of total offers made by all colleges, related to the total number of people who get 3 A grades? Vriance from that would probably be a good starting point for us.

Lammy does however make a good point:

With this degree of disproportionately against black students, it is time to ask the question of whether there is systematic bias.

I’m certainly willing to believe there is. I am not deluded enough to think that Britain is perfect, nor its education system. But I would probably start with the thought that the bias is in the system that leads to the 400 not with the selection within it.

October 12, 2017

In the media rounds supporting his new book, The Square and the Tower: Networks, Hierarchies and the Struggle for Global Power, Niall Ferguson discusses the decline and fall of the oldest power network in Britain:

It used to be that the United Kingdom of Great Britain and Northern Ireland was the United Cronydom of Great Poshhouse and Northern Grousemoor. The only network that mattered was the Old Boy Network. The OBN was formed by men who were the old boys of a tiny elite of boarding schools known as “public schools” because they were closed to the public. Most boys at those schools were scions of the aristocracy or the landed gentry: future barons and baronets.

Even if thick to the point of educational sub-normality, these young gentlemen would attend either Oxford or Cambridge. They would then be given one of the following jobs:

1. Estate manager and courtier (eldest son).

2. Foreign Office or Treasury mandarin (brightest son).

3. Cabinet minister (most extrovert son).

4. Governor of [insert Caribbean island] (youngest son).

5. BBC director-general (Left-wing son).

This is of course a caricature. In reality, there were all kinds of sub-networks — clusters — within the elite network that ran Britain. Sometimes, a brilliant group of talented young men would come together to achieve great things. There was the “Kindergarten” formed by Alfred Milner, which tried (and failed) to transform South Africa into a second Canada or Australia. There were the Apostles — the Cambridge Conversazione, the most exclusive intellectual club of all time — to which the economist John Maynard Keynes belonged.

However, with increasing frequency after 1945, the OBN’s achievements were less than brilliant. Suez. Wilson. Heath. Double-digit inflation. The three-day week. From being the winners of glittering prizes, the OBN degenerated in the eyes of a previously deferential public into the upper-class twits of the year.

In the Sixties the journalists Henry Fairlie and Anthony Sampson popularised the disdainful name that the historian A.J.P. Taylor had given the British elite: “The Establishment”. By the Seventies the Establishment were more like The Embarrassment — objects of sitcom ridicule. By the Eighties they had been almost entirely driven from the corridors of power. Nothing better illustrated this than the Thatcher governments: not only was the prime minister a woman from provincial Lincolnshire (albeit one with an Oxford degree); there were enough ministers in her Cabinet with Jewish backgrounds to inspire off-colour jokes about “Old Estonians”.

September 28, 2017

Steve Kates linked to this post at Luke Muehlhauser’s blog, showing another graph with a hockey stick pattern, but it isn’t one of the IPCC’s misleading bits of propaganda:

In How big a deal was the Industrial Revolution?, I looked for measures (or proxy measures) of human well-being / empowerment for which we have “decent” scholarly estimates of the global average going back thousands of years. For reasons elaborated at some length in the full report, I ended up going with:

Physical health, as measured by life expectancy at birth.

Economic well-being, as measured by GDP per capita (PPP) and percent of people living in extreme poverty.

Energy capture, in kilocalories per person per day.

Technological empowerment, as measured by war-making capacity.

Political freedom to live the kind of life one wants to live, as measured by percent of people living in a democracy.

(I also especially wanted measures of subjective well-being and social well-being, and also of political freedom as measured by global rates of slavery, but these data aren’t available; see the report.)

Anyway, the punchline of the report is that when you chart these six measures over the past few millennia (data; zoomable), you get a chart like this (axes removed for space reasons):

Click to embiggen

(And yes, there’s still a sharp jump around 1800-1870 if you chart this on a log scale.)

Basically, if I help myself to the common (but certainly debatable) assumption that “the industrial revolution” is the primary cause of the dramatic trajectory change in human welfare around 1800-1870, then my one-sentence summary of recorded human history is this:

Everything was awful for a very long time, and then the industrial revolution happened.

September 17, 2017

The most fundamental problem in Piketty’s book, then, is that he misses the main act. In focusing solely on the distribution of income, he overlooks the most surprising secular event in history: the Great Enrichment of the average individual on the planet by a factor of 10 and in rich countries by a factor of 30 or more. Many humans are now stunningly better off than their ancestors were.

This includes a gigantic improvement of the poorest — your ancestors and mine. By dramatic increases in the size of the pie, the poor have been lifted to 90 or 95 percent of equal sustenance and dignity, as against the 10 or 5 percent attainable by redistribution without enlarging the pie.

What caused the Great Enrichment? It cannot be explained by the accumulation of capital, as the very name “capitalism” implies. Our riches were not made by piling brick upon brick, bachelor’s degree upon bachelor’s degree, bank balance upon bank balance, but by piling idea upon idea. The bricks, BAs, and bank balances were of course necessary. Oxygen is necessary for a fire. But it would be unenlightening to explain the Chicago Fire of 1871 by the presence of oxygen in the earth’s atmosphere.

The original and sustaining causes of the modern world were indeed ethical, not material. They were the widening adoption of two new ideas: the liberal economic idea of liberty for ordinary people and the democratic social idea of dignity for them. This, in turn, released human creativity from its ancient trammels. Radically creative destruction piled up ideas, such as the railways creatively destroying walking and the stage coaches, or electricity creatively destroying kerosene lighting and the hand washing of clothes, or universities creatively destroying literary ignorance and low productivity in agriculture. The Great Enrichment requires not accumulation of capital or the exploitation of workers but what I call the Bourgeois Deal. In the historical lottery the idea of an equalizing liberty and dignity was the winning ticket, and the bourgeoisie held it.

That even over the long run there remain some poor people does not mean the system is not working for the poor, so long as their condition is continuing to improve, as it is, and so long as the percentage of the desperately poor is heading toward zero, as it is. That people still sometimes die in hospitals does not mean that medicine is to be replaced by witch doctors, so long as death rates are falling and so long as the death rate would not fall under the care of the witch doctors. It is a brave book Thomas Piketty has written. But it is mistaken.

September 11, 2017

The central problem with the book, however, is an ethical one. Piketty does not reflect on why inequality by itself would be bad. To be sure, it’s irritating that a super rich woman buys a $40,000 watch. The purchase is ethically objectionable. She should be giving her income in excess of an ample level of 2 cars, say, not 20; 2 houses, not 7; 1 yacht, not 5 — to effective charities. Andrew Carnegie enunciated in 1889 the principle that “a man who dies thus rich dies disgraced.” Carnegie gave away his entire fortune. (Well, he gave it at death, after enjoying a castle in his native Scotland and a few other baubles.) But the fact that many rich people act in a disgraceful fashion does not automatically imply that the government should intervene to stop it. People act disgracefully in all sorts of ways. If our rulers were assigned the task in a fallen world of keeping us all wholly ethical, the government would bring all our lives under its fatherly tutelage, a nightmare achieved approximately before 1989 in East Germany and now in North Korea.

Notice that in Piketty’s tale the rest of us fall only relatively behind the ravenous capitalists. The focus on relative wealth or income or consumption is one serious problem in the book. Piketty’s vision of apocalypse leaves room for the rest of us to do very well indeed — rather non-apocalyptically — as in fact since 1800 we have. What is worrying Piketty is that the rich might possibly get richer, even though the poor get richer, too. His worry is purely about difference, about a vague feeling of envy raised to a theoretical and ethical proposition.

But our real concern should be with raising up the poor to a condition of dignity, a level at which they can function in a democratic society and lead full lives. It doesn’t matter ethically whether the poor have the same number of diamond bracelets and Porsche automobiles as do owners of hedge funds. But it does indeed matter whether they have the same opportunities to vote or to learn to read or to have a roof over their heads.

Adam Smith once described the Scottish idea as “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice.” It would be a good thing, of course, if a free and rich society following Smithian liberalism produced a Pikettyan equality. In fact, it largely has, by the only ethically relevant standard of basic human rights and basic comforts. Introducing liberalism in Hong Kong and Norway and France, for instance, has regularly led to an astounding betterment and to a real equality of outcome — with the poor acquiring automobiles and hot-and-cold water at the tap that were denied in earlier times even to the rich, and acquiring political rights and social dignity that were denied in earlier times to everyone except the rich.

September 9, 2017

Piketty’s definition of wealth does not include human capital, owned by the workers, which has grown in rich countries to be the main source of income, when it is combined with the immense accumulation since 1800 of capital in knowledge and social habits, owned by everyone with access to them. Once upon a time, Piketty’s world without human capital was approximately our world, that of Ricardo and Marx, with workers owning only their hands and backs, and the bosses and landlords owning all the other means of production. But since 1848 the world has been transformed by what sits between the workers’ ears.

The only reason in the book to exclude human capital from capital appears to be to force the conclusion Piketty wants to achieve. One of the headings in Chapter 7 declares that “capital [is] always more unequally distributed than labor.” No it isn’t. If human capital is included — the ordinary factory worker’s literacy, the nurse’s educated skill, the professional manager’s command of complex systems, the economist’s understanding of supply responses — the workers themselves, in the correct accounting, own most of the nation’s capital — and Piketty’s drama falls to the ground.

Finally, as he candidly admits, Piketty’s own research suggests that only in the United States, the United Kingdom, and Canada has income inequality increased much, and only recently. In other words, his fears were not confirmed anywhere from 1910 to 1980; nor anywhere in the long run at any time before 1800; nor anywhere in Continental Europe and Japan since World War II; and only recently, a little, in the United States, the United Kingdom, and Canada. That is a very great puzzle if money tends to reproduce itself as a general law. The truth is that inequality goes up and down in great waves, for which we have evidence from many centuries ago down to the present, which also doesn’t figure in such a tale.

So, when I woke up this morning I woke up thinking of how time is different in different parts of the world, which is what the people (Heinlein and Simak included) who pushed for the UN and thought it was the way of the future didn’t seem to get (to be fair, in Tramp Royale it becomes obvious Heinlein got it when he traveled there, and realized it was impossible to bring such a disparate world under one government.)

A minor side note, while listening to City, there is a point at which Simak describes what he might or might not have realized was Marx’s concept of “perfect communism” where the state withers away because there’s no need for it.

Simak thought this would be brought about by perfect abundance. There are no crimes of property when everyone has too much. There are no crimes of violence either, because he seems to think those come from property. (Hits head gently on desk.)

This must have seemed profound to me when I first read the book at 12, but right now I just stared at the mp3 player thinking “what about people who capture other people as sex slaves?” “What about people who covet something someone else made, including the life someone made for themselves? Just because everyone has too much, it doesn’t mean that they don’t covet what someone else made of their too much.”

Which is why I’m not a believer in either Communism or for that matter big L Libertarianism. I don’t believe that humans are only a sum of their material needs and crime the result of the unequal distribution of property. (There is also the unequal distribution of talent, or simply the unequal distribution of happiness, all of which can lead to crime — after all Cain didn’t off Abel because he was starving.) And I don’t believe humans are ever going to become so perfect we can get away with no government, because humans will always (being at heart social apes) lust for power, recognition and heck simply control over others (which is subtly different from power.) So we’re stuck with our good servant but bad master.